Fear borrowing cap lift will leave non-stock-holding councils behind

England’s non-stockholding authorities run the very real risk of being “left behind” by the decision to lift the housing revenue account borrowing cap, according to the chair of the District Councils’ Network.

John Fuller (Con) has called on the government to establish a financial stream for councils without a HRA to help deliver long-term investment for those areas.

“If this government is making local councils responsible for housing in their areas then councils will need the fiscal tools and the financial levers to pull in their areas,” Cllr Fuller said.

The leader of South Norfolk Council said councils without a HRA currently have the “greatest housing potential” as they largely surround towns and tend to retain large amounts of land that can be developed. By contrast, Cllr Fuller said, many councils with a HRA tend to be located in urban areas and therefore tend to lack the land required for housing.

There are 160 local authorities which have transferred their housing stock and will be unable to directly build the homes needed in the local area, according to government statistics.

Yet these areas also hold almost a third of the demand required for the government’s target for housebuilding. LGC analysis of central government statistics shows that non-stock-holding authorities have a combined annual housing requirement of 97,540 homes per year, while the government wants to see 300,000 units built every year nationally.

England’s 32 arms-length management organisations, which collectively built 892 homes in 2017, were also bound by the borrowing cap on their housing revenue accounts in the same manner as local authorities. Now the cap has been lifted, however, they are also bound legally by the need to borrow within their means.

Eamon McGoldrick, managing director at the National Federation of Almos, said 80% of almos are now building.

Looking slightly closer at the housing figures for nonstock-holding authorities, however, questions arise as to their short-term viability to build.

Eighteen councils without a HRA have no local plan, for example, while only 70 councils have adopted a plan in the last five years.

LGC contacted the 20 non-stock-holding councils with the biggest housing need, according to government projections, to ask for information on their housing strategies. Of those, only seven responded by disclosing detailed work with local partners, and gave an indication that a lack of a HRA was not constraining housebuilding in their areas.

Aylesbury Vale DC, for example, is deemed to require an additional 1,878 homes per year to meet demand. Although the council has not adopted a local plan, 1,336 units per year have been built on average between 2014 and 2018, a council spokesperson said.

Will Jeffwitz, policy leader at the National Housing Federation, said councils working in close partnership with local housing associations and other organisations is key to housing targets being met.

“We know we need to build 145,000 affordable homes a year to ensure everyone has a quality home they can afford, including 90,000 homes for social rent,” he said. “Alongside housing associations, local authorities will be an important part of that.

“And by working in partnership and drawing on our shared interests and complementary skills we can build even more homes to help alleviate the housing crisis.”

Cllr Fuller argued additional financial capability should be created for councils without a HRA to help where “registered social landlords just aren’t taking up the slack”.

“I’m not going to [hypothetically] call it the IRA - the infrastructure revenue account - but we do need a bucket that can deliver limited borrowing and not affect councils’ general funds,” he said.

There are signs Kensington & Chelsea RBC is “beginning to reinvent itself” in the wake of the Grenfell Tower fire tragedy but the pace of change and process for rehousing victims remains “painfully slow”.

Local authorities must look to involve their local communities fully in any public-private partnership (PPP) if they are to work well, according to the chief executive of one regeneration development firm.

The lifting of the housing revenue account borrowing cap has been lauded as one of the most significant developments for the sector in recent times. But experts have warned that this move alone is unlikely to lead to a revolution in housebuilding.

Permitted development rights, which allows development on certain properties without planning permission, are “toxic” and should not be allowed to take place, according to a review of the planning system.

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